China in Africa: The Real Story

So far, President Obama's visit to Africa has produced no comments as sensational as the "new colonialist" remarks directed at China by former Secretary of State Hillary Clinton when she visited Senegal and Zambia in previous years.

Yet during a town hall with young African leaders, the President invoked a similar sentiment in his remark that "I want to make sure that as countries come to Africa, that it’s
benefiting Africans. ... If there’s going
to be manufacturing taking place of raw materials, locate some of those
plants here in Africa."

A recent guest post by SAIS student Yuan Li on this blog provides another example. In South Africa, the country where President Obama made this comment, the China Africa Development Fund has seven projects: two are in mining, and five are in manufacturing.

Chinese textile factory in Tanzania. Photos: D. Brautigam

The Chinese state that as of the end of 2011, 15.6% of their Africa investment is in manufacturing and 30.6% in mining, with finance (purchase of 20% of Standard Bank) at 19.5% and construction at 16.4%.* From what I can see, there is far more manufacturing investment from China than from the United States. This includes raw materials processing: oil refineries in Chad and Niger, copper smelters in Zambia. According to the US Bureau of Economic Analysis, the US total stock of investment in Africa as of end-2011 was $56.6 billion. Mining made up $33.3 billion (59%) and manufacturing only $3.6 billion (six percent).

Yes, despite concerns about costs and competitiveness, manufacturing is going to be vital for Africa's future employmet generation. So, President Obama: what is the US going to do to catch up to China here?
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* Chinese Academy of International Trade and Economic Cooperation, "China-Africa Trade and Economic Relationship Annual Report 2012." I don't think this is available online yet. I was given a copy last month by the Chinese embassy in Lusaka.